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Matching orbital inclination while still in orbit around Kerbin is incredibly tricky though, mainly because there's no easy way to see the target planet's relative inclination to Kerbin, as well as other factors.

It might be easier to start out with a 0' inclination orbit around Kerbin, and place a maneuver node in the appropriate spot so your new periapsis crosses the orbit of the target, and then add either normal or anti-normal dV to see if that changes your inclination enough. Not sure if it's even efficient to do it that way TBH.

Should I burn prograde always? Or should I burn at the 90 degree mark? Also, dres' orbit is so inclined that even if I burn prograde for the duration of the delta-v burn, i'm always a few degrees off.

I'm not sure what you meant here, if you retrograde burned in orbit you'd descend into Kerbin and crash into the surface?

Furthermore, if I make a mid trajectory burn to correct the inclination dres is nowhere near an encounter.

What you should do if you've set this up properly, is once you're just in a solar orbit, set up a manoeuvre node as soon as possible and do the required changes to your orbit there. Generally you're going to want to do the inclination change as soon as possible too because it's a few degrees at a very far distancedistance, and a lot more degrees change once you're closer.

You're going to probably need to do a significant enough correction burn here, if you have dres set as a target you can make sure your inclination is enough that it should hit dres's orbit and you can see how far ahead/behind you'll be where the two orbits get close/intersect.

From there it should be a case of just playing with the nodes until they get closer and closer. What you'll most likely find is that you'll need to keep alternating between one of the Radial (blue) and pro/retrograde (green) markers on the manoeuvre nodes until it gets closer, then you can click on the periapsis projection for a Dres encounter to make it stay as you make the nodes come even closer again.

70km is right at the edge of the atmosphere with no margin for error at all. I usually aim for an 80 kilometer circular orbit for ships that are only going to stay there until I can arrange a transfer burn elsewhere, and a 100km orbit for things that are going to stay in Kerbin orbit long-term (space stations, etc.). And I put satellites at 200km so they don't clutter up the same orbital zone, makes it easier to click on the things I care about.